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Qwest Agrees To Let MCI Use Its Lines
Other Phone Companies Are Still in Negotiations

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By Christopher Stern
Washington Post Staff Writer
Tuesday, June 1, 2004; Page E01

MCI Inc. and Qwest Communications International Inc. have reached an agreement that will allow the long-distance company to continue providing local telephone service in the 14 western states where Qwest is the dominant local phone company, executives of the two companies said yesterday.

The four-year deal will allow MCI to continue to provide its own brand of local phone service over Qwest's telephone lines.

Separately, MCI and AT&T Corp. negotiated through the weekend in an attempt to reach similar agreements with other regional phone giants. No deals were announced by last evening.

MCI and Qwest agreed after five weeks of negotiations that were supervised by a professional mediator. MCI chief executive Michael D. Capellas and Qwest chief executive Richard C. Notebaert shook hands on the deal during a breakfast meeting on Friday, the two men said yesterday.

"This allows both companies to serve their customers without the intervention of government regulation," Notebaert said.

The deal was reached a month before a set of federal regulations that effectively forced local phone giants such as Qwest to lease their networks to rivals at discounted rates is scheduled to be taken off the books. Those rules have been at the center of a five-year legal battle.

Local phone companies, including Qwest, Verizon Communications Inc., SBC Communications Inc. and BellSouth Corp., won the last round when the U.S. Court of Appeals for the D.C. Circuit ordered the Federal Communications Commission to get rid of the regulations.

The Bush administration is preparing to decide in the next week whether to appeal the lower court's decision to the Supreme Court.

Late last week, FCC Chairman Michael K. Powell called for a new round of negotiations between all the major phone companies. A series of deals by the companies would render moot the need for an appeal.

Powell, who has taken a deregulatory approach to the industry, has said the rules are not necessary.

However, companies such as AT&T and MCI say the regulations provided a regulatory framework that has allowed them and other companies to offer a competitive alternative to the regional phone giants.

Until this weekend, the talks have been at an impasse. Sources said there are still major issues separating all sides of the remaining negotiations. "We are eternally optimistic and will remain here until the eleventh hour, giving it our best shot," Capellas said.


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